Here are the answers with discussion for yesterday’s quiz. The information provided should help you work out why you missed a question or three! If you haven’t already done the Quiz from yesterday then have a go at it before you read the answers. I hope this helps you develop an understanding of modern monetary theory (MMT) and its application to macroeconomic thinking. Comments as usual welcome, especially if I have made an error.
Today’s release by the Australian Bureau of Statistics (ABS) of the – Labour Force data – for May 2013 signals a deteriorating situation. Employment growth was about zero. The fall in the unemployment rate was due to a decline in the participation rate. Monthly hours worked fell as full-time employment contracted. The broad labour underutilisation rate rose sharply by 0.4 pts to 12.9 per cent with more than 908 thousand workers underemployed. This data signals an urgent need for fiscal stimulus to reverse the negative trend. Unfortunately, with both sides of politics locked into an austerity mindset the situation is likely to deteriorate further.
There was a column in today’s Australian Financial Review “When the money-go-round slows, everyone suffers” which bemoaned the fact that all the investment bankers, lawyers and accountants that have been making heaps off the massive growth in the financial services sector are now doing it tough. We read that household budgets are being stretched when some woebegone executive suddenly discovers “multiple sets of $20,000 a year private school fees plus family holidays in Aspen” (from Australia). We feel sorry for them don’t we. The parasites of neo-liberalism who in between crafting handsome consulting contracts for themselves fill their days performing largely unproductive functions to our society. The AFR is, of-course, the neo-liberal propaganda machine that feeds the business sector with arguments about how badly they are doing because workers are overpaid and lazy. Yes, there was also an article in today’s edition about excessive wages and labour market regulation. Meanwhile, the latest evidence from Britain is that workers have taken the equivalent of a 15 per cent real wage cut over the period 2007 and 2012. The cuts have undermined nominal wages of workers in jobs rather than being the result of workers shifting to lower paid jobs. That is unprecedented and confirms the suspicions that the austerity agenda is being driven by a desire to win the class war for capital once and for all.
I was sent a copy of a survey report – Grand Old Party for A Brand New Generation – which was produced by the so-called College Republican National Committee, which is a conservative university-based organisation in the US aiming to recruit people into the GOP. What emerges is that a lot of opinions are expressed but once you consider them in detail the only possible conclusion is that American college students (inasmuch as this is a representative sample) are hopelessly mis-educated on these matters – like the rest of the population. The level of internal inconsistency with respect to positions taken on macroeconomic policies that is demonstrated in the survey results is quite stunning. But don’t blame the students, their teachers and political leaders let them down too. The economic debate around the world is so infested with neo-liberal myths that it is hard for any alternative viewpoints to get oxygen. Yet the data keeps rejecting the mainstream views, which, it seems, only serves to solidify them further. We are all caught in a morass of mis-education – and our societies are drowning as a consequence. Nero fiddled. We do something else. Civilisations do not last forever.
Here are the answers with discussion for yesterday’s quiz. The information provided should help you work out why you missed a question or three! If you haven’t already done the Quiz from yesterday then have a go at it before you read the answers. I hope this helps you develop an understanding of modern monetary theory (MMT) and its application to macroeconomic thinking. Comments as usual welcome, especially if I have made an error.
I am now using Friday’s blog space to provide draft versions of the Modern Monetary Theory textbook that I am writing with my colleague and friend Randy Wray. We expect to complete the text during 2013 (to be ready in draft form for second semester teaching). Comments are always welcome. Remember this is a textbook aimed at undergraduate students and so the writing will be different from my usual blog free-for-all. Note also that the text I post is just the work I am doing by way of the first draft so the material posted will not represent the complete text. Further it will change once the two of us have edited it.
It seems like everything is getting smaller in Germany. I read today that Germany’s longest word (63 letters) has been abandoned. It also seems that their jobs are getting smaller and more people are being forced into them. The so-called “mini-jobs”. Meanwhile Europe’s crowning glory and austerity’s greatest achievement lies a little south of the mini-job kingdom. Eurostat’s latest – Regional labour force data – tells us that in some regions in Spain and Greece, the unemployment rates of the 15-24 year olds have topped 70 per cent and will continue to rise. There are now an increasing chorus in the media from politicians and financial market types who are trying to dress all this up as good news. Apparently, the Greek share market is booming. The agenda is clear – if they can somehow convince the world that the devastation of Greece is “good news” then it will reduce the growing resistance to austerity that is starting to broaden the debate. The elites don’t want any moderation. So they have to re-construct devastation to appear to be bringing good outcomes. The madness continues. Tell the 15-24 year olds in Dytiki Makedonia that things are going along swimmingly!
The Fair Work Commission, the Federal body entrusted with the task of determining Australia’s minimum wage handed down its – 2012-13 decision – today. The news was not good for more than 1.5 million workers (out of some 11.6 million) who are reliant on award wages in Australia (that is, low-paid workers). These workers are typically found in the retail sector, personal care services, hospitality, cleaning services and unskilled labouring. They already earn a pittance and endure poor working conditions. The FWC gave the lowest paid workers an extra $15.80 per week (a rise of just over 2.6 per cent), which will at best maintain the current real minimum wage but denies this cohort access to the fairly robust national productivity growth that has occurred over the last two years. The decision also widens the gap between the low paid workers and other wage and salary recipients. The real story though is that today’s minimum wage outcome is another casualty of the fiscal austerity that the Federal Government has imposed on the nation which is destroying jobs and impacting disproportionately on low-paid workers. The FWC cited rising unemployment as a reason for its mean pay rise.
Here are the answers with discussion for yesterday’s quiz. The information provided should help you work out why you missed a question or three! If you haven’t already done the Quiz from yesterday then have a go at it before you read the answers. I hope this helps you develop an understanding of modern monetary theory (MMT) and its application to macroeconomic thinking. Comments as usual welcome, especially if I have made an error.
I am now using Friday’s blog space to provide draft versions of the Modern Monetary Theory textbook that I am writing with my colleague and friend Randy Wray. We expect to complete the text during 2013 (to be ready in draft form for second semester teaching). Comments are always welcome. Remember this is a textbook aimed at undergraduate students and so the writing will be different from my usual blog free-for-all. Note also that the text I post is just the work I am doing by way of the first draft so the material posted will not represent the complete text. Further it will change once the two of us have edited it.
Its an amazing world where the neo-liberals go from one ridiculous economic policy failure (plan) to another as if we are totally without any understanding of what they are up to. The latest examples include the German talk about how growth oriented they are and their sudden concern for the youth unemployment emergency that they now say needs immediate attention. Of-course, this “emergency” has been staring them in the face for nigh on five years and is the creation of their policies. Now they cry crocodile tears and promise a few measly billion in structural assistance, which won’t even scratch the surface of the problem they created. And they have the audacity to think they have credibility. Another example, is the decision by the ruling elites in Brussels to give France, Spain, Poland and Slovenia a further two years to kill their economy and this is being constructed as lenience. So bash your economy to hell slighly more slowly than before and everyone is meant to think that is credible. Why do we tolerate these morons? Then we have the OECD who waste trees by producing their Economic Outlook, which came out yesterday.
Humans are very habitual. In Japan as elsewhere. It seems that a regular occurrence in Japan is that some career-minded economist comes out and predicts the end. The end can come in various projected forms. Hyperinflation, government bankruptcy, bond markets vaporising before our eyes, accelerating then exploding bond yields, Mount Fuji erupting and covering the plain beneath it with hot lava, etc. In fact, the eruption of Mount Fuji is the only probable event although even that has erupted only 16 times since 781 – the last eruption being 305 years ago. That august publication (not), the Wall Street Journal gave air to the latest fanatic in the article (May 27, 2013) – Tokyo Urged to Undertake Serious Fiscal Reforms. None of the predictions in that article match the chance that Mount Fuji might erupt tomorrow. In fact, none of the predictions have any chance of being realised. And so we wait the next habitual event in the Japanese calendar which will surely come in the form of some hero in a suit from one of the corrupt ratings agencies declaring that Japan’s sovereign credit rating is in danger or has been downgraded. Like a yo-yo, the rating goes up and down when the ratings agencies need a bit of publicity. Does anything happen much in Japan when the ratings change – nought! As with all these habitual breakouts of nonsense, it is as you were Japan. Keep pumping aggregate demand and things will be fine.
I thought it was hysterical when back in 2009 and 2010 there were papers written and conferences held which carried the theme of the “lessons learned from the crisis”. For example, the – 6th ECB Central Banking Conference (November 2010) – had an array of leading mainstream economists and central bankers telling us what it was all about despite these same characters previously representing a body of work that told us the macroeconomic problem (cycles and unemployment) had been solved. There were lots of papers, Op Eds and media commentary (every day on Fox News and its ilk) warning us of the worst unless governments imposed austerity. Even as recently as the last US election, the “skies are about to fall in” message was prominent and dominated the Republican campaign. Millions of people are unemployed as a result of these economists having sway with policy makers. The evidence denying their predictions etc started to slowly trickle in around 2008 and as the years of this madness have passed the evidence is now a dam break. At this point, the mainstream just talk among themselves and continue to bank their high salaries and take on lucrative consultancies. Denial of facts is their ultimate recourse.
Here are the answers with discussion for yesterday’s quiz. The information provided should help you work out why you missed a question or three! If you haven’t already done the Quiz from yesterday then have a go at it before you read the answers. I hope this helps you develop an understanding of modern monetary theory (MMT) and its application to macroeconomic thinking. Comments as usual welcome, especially if I have made an error.
I am now using Friday’s blog space to provide draft versions of the Modern Monetary Theory textbook that I am writing with my colleague and friend Randy Wray. We expect to complete the text during 2013 (to be ready in draft form for second semester teaching). Comments are always welcome. Remember this is a textbook aimed at undergraduate students and so the writing will be different from my usual blog free-for-all. Note also that the text I post is just the work I am doing by way of the first draft so the material posted will not represent the complete text. Further it will change once the two of us have edited it.
The economics journalists were out in force again today in Australia after being fed their latest copy from the neo-liberal propaganda machine. In this case, the propaganda was in the form of the first report published yesterday (May 22, 2013) from the newly established Parliamentary Budget Office – Estimates of the structural budget balance of the Australian Government 2001-02 to 2016-17. The Report estimates that huge unsustainable budget deficits and has led to a flurry of media activity all just repeating what the PBO told them was the message. I wonder if any of the journalists have actually read the report in detail particularly the Appendix where the technicalities are exposed. Technicalities is too strong a word because it suggests there is something robust going on. Nothing could be further from the truth. This is another shoddy attempt to bias the public perception towards thinking the current (pitifully small relative to the scale of the problem) budget deficit is problematic.
There was a article in the UK Guardian yesterday (May 21, 2013) – No, Argentina is not a ‘cautionary tale’ for the eurozone. The basic tenet of the article, written by a Greek journalist is that there is no applicable analogy that can be drawn between the experience of Argentina during its crisis in 2001-2002 and the current crisis in Greece. The author rejects any attempts to draw a comparison because Greece would have to introduce a new currency and this would mean no-one would agree to hold it and this would prevent Greece from purchasing essential imports. The author claims that all Argentina had to do was break a pegged arrangement. My view expressed in this blog is that while there are technical differences in the way the monetary system would change in Greece if it abandoned the Euro and what happened in Argentina, the similarities between the two cases are greater. There is an applicable analogy and it scares those who want to hang onto the Euro at all costs.
The fiscal austerity imposed on the southern European nations such as Greece and Spain has been imposed by the Troika with two justifications. First, that the private sectors in these nations would increase spending as the public sector cut spending because they would no longer fear the future tax hikes associates with rising deficits (the Ricardian argument). The evidence is clear – they haven’t. The second argument was that massive cost cutting (the so-called internal devaluation) would improve the competitiveness of the peripheral nations, close the gap with Germany and instigate an export bonanza. It was all about re-balancing we were told. The evidence for that argument is clear – it was a lie. The massive impoverishment of these nations and the millions of jobs that have been lost and the destruction of a future for around 60 per cent of their youth (who want to work) has all been for nothing much. As was obvious when they started.
Here are the answers with discussion for yesterday’s quiz. The information provided should help you work out why you missed a question or three! If you haven’t already done the Quiz from yesterday then have a go at it before you read the answers. I hope this helps you develop an understanding of modern monetary theory (MMT) and its application to macroeconomic thinking. Comments as usual welcome, especially if I have made an error.
I am now using Friday’s blog space to provide draft versions of the Modern Monetary Theory textbook that I am writing with my colleague and friend Randy Wray. We expect to complete the text during 2013 (to be ready in draft form for second semester teaching). Comments are always welcome. Remember this is a textbook aimed at undergraduate students and so the writing will be different from my usual blog free-for-all. Note also that the text I post is just the work I am doing by way of the first draft so the material posted will not represent the complete text. Further it will change once the two of us have edited it.